Green supply chain management innovation diffusion and its relationship to organizational improvement: An ecological modernization perspective

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Abstract

Drawing on diffusion of innovation and ecological modernization theories, we identify three types of industrial manufacturers, namely early adopters, followers, and laggards, based on the adoption of green supply chain management (GSCM) practices among Chinese manufacturers. Test results indicate that differences exist between the three types of GSCM adopters in terms of their environmental, operational, and economic performance. Understanding how Chinese manufacturers adopt GSCM practices and if this adoption affects their performance contributes theoretical advancement to the diffusion of innovation theory. Practically, the results provide managerial insights for manufacturers to benchmark for environmental management practices and performance improvement.

Introduction

Resource depletion and an increasingly detrimental environmental burden caused by organizational production operations have led Chinese and other international regulators to impose stricter regulatory policies. China's Cleaner Production Promotion Law, enacted in January 2003, and China's Circular Economy Promotion Law, approved in August 2008 and enacted in January 2009, are two environmentally focused regulatory policies directly affecting business. Chinese organizations are now pressured or encouraged to implement innovative environmental management practices such as cleaner production if their energy and resource consumption or emission discharges do not meet international or local requirements. In addition, organizations seeking innovative environmental management programs can receive governmental support such as subsidies through various government programs that include demonstration projects at national, provincial, and municipal levels. Given these regulatory policies China's government realizes that as a developing nation it has to maintain a precarious balance of economic and environmental performance. As a result, manufacturing enterprises in China are pressured and guided to help improve both their economic and environmental performance through innovative management practices.

Ecological modernization theory (EMT), a theory for environmental innovation, has been offered as a possible solution to the conflict between industrial development and environmental protection (Murphy and Gouldson, 2000). Prompted by the need to gain environmental performance and profitability which is envisaged under EMT, green supply chain management (GSCM) has become an emerging management practice for companies who wish to gain competitiveness through environmental innovation (Hall, 2001). In this study, we define GSCM as an emergent environmentally sustainable organizational technological innovation,1 through integration of environmental concerns into organizational supply chain management activities (Seuring and Müller, 2008). We argue that EMT is a pertinent management theory to help understand and guide ecologically oriented management innovation and change, at both the firm level and the supply chain level of analysis. The core theoretical underpinning of EMT is that organizational technological innovation, such as GSCM, will help organizations improve in both environmental and economic dimensions.

Drawing on EMT and linking it to the diffusion of innovation (DoI) theory at the organizational level, we advance the proposition that different clusters of manufacturers characterized with specific GSCM innovations do exist. This clustering scenario relates to the issue that GSCM practices seem to diffuse from proactive manufacturers to their reactive counterparts through several stages. One research objective in our study is to link these two theories by putting forth the supposition that EMT advocates the benefits of adopting ecological innovations, and with support from DoI that earlier adopters of ecological innovations will gain early adoption advantages and perform better than later adopters. To investigate this relationship we rely on DoI, which suggests that innovation decisions may be optional where an organization has an opportunity to adopt or reject the idea (Rogers, 1983) and that different patterns of innovation adoption may affect firms’ outcomes. Another objective of this study is to investigate whether there are different types of manufacturers in China based on environmental management innovation diffusion, i.e., GSCM innovations, and, if so, how manufacturer adoption categories are related to performance outcomes.

While studies investigating environmental management exist for developed countries (Montabon et al., 2000, Carter and Dresner, 2001, Corbett and Klassen, 2006, Schaefer, 2007), we contribute to the body of knowledge by investigating GSCM in a developing economy and the determination of EMT in the patterns of the adoption of GSCM practices. The results will provide guidance to organizations within China, or seeking to do business in China, on GSCM practices that may be worthwhile adopting. In addition, this paper is one of the first to examine the adoption of GSCM with an integrated framework incorporating EMT and DoI. We will determine whether differing levels of adoption (diffusion) of GSCM practices result in differing levels of performance improvements. This finding will help us to further elicit whether the influences of GSCM practice adoption will have similar influences for later adopters.

To achieve our objectives, we briefly introduce EMT and DoI and how GSCM practices are considered as innovations within these theoretical frameworks in section ‘Theoretic and proposition development’. Based on these theoretical perspectives we proceed to put forward two general, exploratory propositions in section ‘Theoretic and proposition development’. The research methodology used for testing the propositions is discussed in section ‘Methodology’. In section ‘Results’, we examine the study results followed by conclusions including identified future research directions in section ‘Conclusions and discussions’.

Section snippets

Ecological modernization theory, diffusion of innovation theory, and GSCM

EMT posits that environmental problems may be mitigated by increasing resource efficiency, improving sustainability, while retaining the basic system of capitalist production and consumption. Within this situation environmental protection no longer is a ‘problem’, but an ‘opportunity’. EMT suggests that manufacturers can overcome barriers to innovation that: prevent them from going beyond control technologies to consider clean technologies; from complementing technological change with

Questionnaire development

We developed a survey questionnaire to examine if there are different GSCM practice innovation clusters (according to the adoption level) for Chinese manufacturers and if these different GSCM clusters also differ in performance outcomes. The research process for this study is similar to the previous literature (Lai, 2004) and involves four main steps: (1) formulation of research problems, including review of the relevant literature, understanding potential performance improvement through GSCM,

Comparisons for GSCM practice

Table 2 summarizes the rank order results of GSCM practices based on the mean values as reported by the respondents. The larger the mean value reported the more mature the implementation of the GSCM practices at the respondent firm and vice versa.

We conducted an exploratory factor analysis (EFA) to assess the 21 measurement items for GSCM adoption. The initial factor solution resulted in four factors with Eigenvalues higher than unity. The four-factor solution for the 21 items accounted for

Conclusions and discussions

Overall our results show that varying organizational characteristics and top managers’ attitudes cause organizations to adopt innovations at different phases (Damanpour and Schneifer, 2006). The statistical analyses of our empirical data collected from 245 Chinese manufacturers support the propositions that manufacturers in China may be grouped, based on DoI, into different GSCM adopter clusters, and that these groupings attain varying levels of GSCM which caused supporting EMT performance

Acknowledgements

We thank the two anonymous reviewers for their useful comments on an earlier version of this paper. This work is supported by a grant from National Science Fund for Distinguished Young Scholars (71025002), National Basic Research Program of China (973 Program, 2011CB013406) and the National Natural Science Foundation of China Projects (70772085, 71033004). Lai was supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (GRF PolyU 5434/08H).

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